AMNESTY INTERNATIONAL UK, BASIC, INTERNATIONAL
ALERT, OXFAM GB AND SAFERWORLD

A. FURTHER EXAMPLESOF UK LICENCED
PRODUCTION OPERATIONSOF CONCERN

i. Otokar/LandRoverTurkey

1. Since 1987 a Turkish company Otobus Karoseri
Sonayi AS (Otokar) has assembled Land Rovers under licence for
sale to military and civilian markets in Turkey. In 1994 production
began in Turkey of a new type of light reconnaissance armoured
vehiclethe Scorpion. It is based on the Land Rover Defender
90/100 and is designed for transporting troops for counter-insurgency
and light attack. The licenced production deal involves the export
of 70 per cent of the component parts from the UK, which are listed
as civilian transfers, and therefore do not require an export
licence. The parts are then assembled at the Otokar factory and
machine guns and night vision surveillance cameras added. These
vehicles can be formidable weapons and there are documented cases
where light reconnaissance armoured vehicles have been used for
facilitating human rights violations in Turkey. Approximately
2,500 vehicles are assembled each year for use by the Turkish
army and security forces.

Exports of Otokar

2. There is concern that these armoured
and armed vehicles produced in Turkey under licence will be exported
to countries that would not currently be granted an export licence
if the vehicle was for direct export from the UK. In 1995 it was
reported that Otokar had a $200 million deal to provide Algeria
with 700 Scorpion vehicles and a $100 million deal with Pakistan
for Scorpions[9].
In 1998 there were reports of the company negotiating the provision
of between 30-40 vehicles to Israel[10].

3. GKN Defence Ltd in Telford has established
an agreement with the company Asian Armoured Vehicle Technologies
Corp, in Subic Bay in the Philippines, to produce Simba vehicles.
It was reported in 1994 that the first seven Simba 4x4 Armoured
Personnel Carriers had been delivered to the Philippine Armed
Forces. 150 vehicles had been ordered and fitted with a 12.7 mm
Browning Machine Gun turret. Eight Simbas would be supplied from
the UK, several as kits and the rest to be assembled at the Subic
Bay plant operated by the Asian Armoured Vehicles Technologies
Corp. A number of variants would probably be developed.

4. This case was raised in Parliament:

Ann Clwyd: To ask the President of the Board
of Trade what control she has over the transfer of (a) armoured
vehicles and (b) armoured personnel carriers to (i) Indonesia
and (ii) other countries from the GKN Defiance [sic] licensed
production facility in the Philippines. [3639]

Mrs Roche: The control of exports from the Philippines
is a matter for the Philippine Government. Any export of licensable
goods from the UK to the Philippines would be subject to UK export
controls.[11]

5. The Government answer illustrates the
inadequate control of UK licenced production agreements results
in the establishment of new centres of production of military/security
equipment over which the UK government has little or no control.
There is a danger that vehicles produced in the Philippines could
then be used by the country's security forces for human rights
violations or could be exported to sensitive destinations, where
a direct export from the UK of such vehicles would not be permitted.
The dangerous use of the vehicles being used in this way has recently
been highlighted[12].
For example, two Muslim male residents suspected of being MILF
(Moro Islamic Liberation Front) commanders were abducted by government
forces in May 2000, taken on board a British Simba armoured personnel
carrier (made under licence in the Philippines), and later found
"salvaged"summarily executed.

6. In the United States, licenced production
(or manufacturing license) agreements are treated as physical
exports and require prior approval from the US State Department.
If such licenced production agreements value more than $50 million,
the US State Department must notify the Congress before the agreement
is approved. The US licensed production contracts usually limit
production levels and prohibit sales or transfers to third countries
without prior US Government consent.[13]

7. The relevant sections of the US International
Traffic in Arms Regulations (ITAR) are highlighted below:

(a) The approval of the Office of Defense
Trade Controls must be obtained before the defense services described
in 120.9(a) may be furnished. In order to obtain such approval,
the US person must submit a proposed agreement to the Office of
Defense Trade Controls [in the State Department].

Sect. 120.9 Defense service

(a) Defense service means:

(1) The furnishing of assistance (including
training) to foreign persons, whether in the United States or
abroad in the design, development, engineering, manufacture, production,
assembly, testing, repair, maintenance, modification, operation,
demilitarisation, destruction, processing or use of defense articles;

(2) The furnishing to foreign persons of any
technical data controlled under this subchapter (see Sect. 120.10),
whether in the United States or abroad;

(5) The technical data or defense service
exported from the United States in furtherance of this agreement
and any defense article which may be produced or manufactured
from such technical data or defense service may not be transferred
to a person in a third country or to a national of a third country
except as specifically authorized in this agreement unless the
prior written approval of the Department of State has been obtained.[14]

C. ADDITIONAL
DETAILSOF
US ARMS BROKER
REGISTER

8. At the end of October 1999 there were
134 brokers registered in the US[15].